Cybercrime: Britain 'Losing The War' Say MPs

The threat of a cyberassault on Britain is considered so serious it is marked as a higher threat than a nuclear attack, according to an influential group of MPs.

Despite being the preferred target of online criminals in 25 countries, the UK is still "complacent" towards cybercrime as victims are "hidden in cyberspace", the Home Affairs Select Committee said.

The group of MPs said funding and resources for tackling online crime, which includes identity theft, industrial espionage, credit card fraud and child exploitation, has not been sufficiently allocated.

Cybercriminals in 25 countries are said to be targeting the UK

Tougher sentences for online criminals and improved training for police officers are recommended by the committee to deal with the growing threat.

Committee chair Keith Vaz said: "We are not winning the war on online criminal activity. We are being too complacent about these e-wars because the victims are hidden in cyberspace.

"The threat of a cyberattack to the UK is so serious it is marked as a higher threat than a nuclear attack.

Christopher Whitehead, the hacker at the heart of an attack on Paypal

"You can steal more on the Internet than you can by robbing a bank.

"If we don't have a 21st century response to this 21st century crime, we will be letting those involved in these gangs off the hook."

Online crime - committed by lone hackers, activist groups and nation states sponsoring industrial espionage - has been estimated by online security firm Norton to globally cost around £250bn ($388bn) in financial losses.

The committee heard that the National Fraud Intelligence Bureau had discovered about 25 countries predominantly targeting the UK and said it was "deeply concerned" that EU partner countries are not doing enough to prevent the attacks.

The committee added it was "surprised" hackers from the group Anonymous, who cost Paypal more than £3.5m, were not given stiffer sentences.

Christopher Weatherhead, a 22-year-old university student who was described as a key operator in the group, was sentenced to 18 months in prison for his role in the attack. 

Hidden in cyberspace: The UK is too complacent towards e-crime, say MPs

Commissioner Adrian Leppard, of City of London Police, the most senior policeman in the country on online fraud, warned the committee that a quarter of the 800 specialist internet crime officers could be axed as spending is cut.

The committee was also alarmed that the Child Exploitation and Online Protection centre is having its budget cut by 10% over four years and its chief executive Peter Davies is leaving.

Last week, David Cameron threatened to impose tough new laws on internet firms if they fail to blacklist key search terms for illegal images by October as part of a wider crackdown on online pornography.

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Coalition's £5bn Export Scheme Yet To Launch

A £5bn scheme designed to boost exports which was due to be launched last year has yet to help a single British firm.

Ministers said details of the export refinancing scheme, which was due to be up and running by the end of 2012, were still being worked on.

Shadow business secretary Chuka Umunna said it was a "huge disappointment" and claimed the Government was "letting down businesses across Britain".

The refinancing facility was announced 12 months ago and should have been available later in 2012.

Michael Fallon: Scheme still being developed

The scheme aimed to provide long-term loans for overseas buyers of UK exports at competitive rates by guaranteeing a series of short-term bank loans.

But in a written parliamentary answer Business Minister Michael Fallon has admitted the policy is still being finalised.

"The parameters of the Export Refinancing Facility are still being developed and therefore no businesses have yet received support through the facility," he said.

Mr Umunna said: "The Tory-led Government promised to increase exports to £1 trillion by 2020, but our trade deficit is now at its highest level in six months and the UK has the largest goods trade deficit of any EU member state.

"To build a balanced and sustained recovery we need to help more businesses to export.

"Ensuring that firms have access to the finance they need to export is a crucial element of this.

"Ministers like to talk about the global race, but their failure is letting down businesses across Britain which are being held back from competing".

A UK Export Finance spokesman said the scheme had to comply with European Union state aid rules and provide value for money for the taxpayer.

She said: "The scheme is being designed to ensure that it helps businesses to export whilst providing good value for the taxpayer and complying with state aid rules.

"We want to make sure we get it right and are making progress.

"In the meantime, UK Export Finance is providing considerable assistance to UK exporters through its existing facilities.

"In 2012/13 UKEF provided £4.3bn of support to British firms."

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Barclays H1 Profit £3.59bn Amid £5.8bn Issue

Barclays has reported a 17% drop in half-year adjusted profit of £3.59bn, as it announced a £5.8bn capital-raising rights issue.

It said adjusted income decreased 3% to £15bn, in the six months to June 30.

Barclays said a payment protection insurance (PPI) mis-selling provision of £1.3bn had been made and £650m had been put aside for provisions in relation to interest rate swaps.

The total mis-selling bill for the bank, which had been criticised previously for its aggressive corporate culture, now stands at £5.5bn.

The lender, which was hit last year by the Libor rate-rigging crisis, said it would seek a capital boost in order to meet capital requirements laid down by the Bank of England (BoE).

Past problems continue to haunt Barclays and its cash-call comes after the BoE last month told it to increase its leverage ratio - a measure of equity to assets - to reduce its risk.

Barclays was criticised for its ethics under former CEO Bob Diamond (c)

The rights issue will be for one new ordinary share for every four existing ordinary shares held and priced the issue at 185p per new ordinary share.

Barclays said: "This represents a discount of approximately 40.1% to the closing price on the London Stock Exchange of 309.05p per ordinary share on 29 July 2013 ... and a discount of approximately 34.9% to the theoretical ex-rights price based on the closing price."

The bank said its fundraising was a "bold but balanced plan" which would see it meet regulator demands by June next year.

It stressed it would not impact on its aims to boost lending to households and businesses.

However, shares fell around 5% in early trading as the rights issue was far higher than expected and as Barclays admitted its plans will put back some of the financial targets under its overhaul, dubbed Project Transform.

The bank will also issue £2bn of bonds that are turned into shares or wiped out if the bank gets into trouble.

Chief executive Antony Jenkins said the capital-raising plan enabled the bank to keep growth in its planned level of lending.

"I am certain the decisive and prompt action we are taking will leave Barclays stronger," Mr Jenkins said.

:: The bank said an estimated £42bn of Funding for Lending (FLS) capital was made to UK households and businesses in the six-month period.

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Omnicom Merger With Publicis Creates Ad Giant

Omnicom Group Inc. and Publicis Groupe SA plan to merge to create the world's largest advertising firm.

The new company, will be called Publicis Omnicom Group, will be worth more than $30 billion.

It will be traded in New York and Paris.

Omnicom Chief Executive John Wren and Publicis CEO Levy will jointly lead the new company for the first 30 months, then Mr Levy will become non-executive chairman and Mr Wren CEO.

The new company will have combined sales of nearly $23 billion and 130,000 employees, taking over the current London-based industry leader WPP PLC.

The transaction- presented as a "merger of equals" - brings together Publicis brands such as Saatchi & Saatchi and Leo Burnett with Omnicom's BBDO Worldwide and DDB Worldwide.

"This is a new company for a new world," Mr Levy said.

The combined group will employ 130,000 people

"It will be able to face the exponential development of new internet giants like Facebook and Google, changing consumer behaviour, the explosion of big data, as well as handle the blurring of roles of all the players in the market."

The two veteran CEOs chose the neutral territory of the Netherlands for the new holding company.

The move is aimed at bolstering the companies' focus on growing Asian and Latin American markets such as China and Brazil to offset weak growth in European markets.

However, the decrease in competition could present regulatory hurdles in the US and Europe.

Client conflicts also could be an issue, as rivals such as Coca-Cola Co., PepsiCo, McDonald's, Yum Brands' Taco Bell, Johnson & Johnson and Procter & Gamble now find themselves under the same umbrella.

The new group will have to get antitrust clearance from authorities in around 45 countries.

"We've looked at the antitrust issues very carefully and are not expecting anything that would prevent us from going forward," said Mr Wren.

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Energy Watchdog 'Failing Consumers', Say MPs

By Tadhg Enright, Business Reporter

The energy watchdog, Ofgem, is failing consumers and undermining trust in the market, a group of MPs have said - urging it to "use its teeth a bit more".

A report by the Energy and Climate Change Select Committee has said there is a "lack of transparency" about profits made by the Big Six energy providers.

Committee member and Lib Dem MP Sir Robert Smith said: "At a time when many people are struggling with the rising costs of energy, consumers need reassurance that the profits being made by the Big Six are not excessive.

"Unfortunately, the complex, vertically integrated structure of these companies means that working out exactly how their profits are made requires forensic accountants."

Labour MP John Robertson added: "Ofgem needs to use its teeth a bit more and force the energy companies to do everything they can to prove that they are squeaky clean when it comes to making and reporting their profits."

There has been long standing criticism of the UK energy market in which six major competitors show little evidence of competing with each other on price.

Rising prices for consumers in recent years has been blamed on higher wholesale prices for energy providers, however the Committee notes in its report that many of Britain's major providers are generators of energy and therefore profit from higher wholesale prices too.

The Big Six have also been criticised for offering a confusing range of tariffs which give the impression of greater consumer choice but offer little in the way of discounts.

British Gas and EDF customer Mary Phillips told Sky News that in the winter she frequently has to choose between spending on food or fuel, and that competition in the energy market has done nothing to help.

She said: "I keep getting notes from all these different energy companies saying that they're making their bills much easier to understand. You're joking!

"Every single different supplier says that they're going to give me a much better deal than all the other suppliers. I don't believe it really. I think they might do it for about three months and then it will all go up suddenly."

As the industry's watchdog, Ofgem has the power to order an inquiry into competition in the energy market but has chosen not to do so. Instead it hopes that the threat of such a forensic analysis of the Big Six's energy practices will encourage them to clean up their acts.

Ofgem's Rachel Fletcher said: "We share the committee's goal of restoring consumers' trust.

"We agree with the committee that suppliers have been poor at communicating with their customers.

"Ofgem has made energy companies produce yearly financial statements, which have been reviewed twice by independent accountants and found to be fit for purpose."

The report also criticises the Government for not doing enough to help millions of low-income families living in poorly insulated homes and who struggle with fuel poverty.

The MPs argue that programmes to help protect the most vulnerable should be funded through direct taxation rather than levies on the bills of those who can afford it.

Sir Robert said: "Fuel poverty is getting worse as energy prices rise making it all the more critical that the Government must respond to the Hills Review as a matter of urgency.

"Tax-funded public spending is a less regressive mechanism than levies on energy bills, which can hit some of the poorest hardest. Shifting the emphasis from levies to taxation would help protect vulnerable households."

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Ryanair Profit Plunges 21% In First Quarter

Budget carrier Ryanair has seen its first quarter year-on-year profit fall by 21%, despite a growth in passenger numbers.

Ryanair, Europe's largest low-cost carrier, said profit for the quarter ending June 30 was 78m euros (£67m).

It said the that in the same period traffic grew 3% to 23.2 million passengers.

The company said the timing of Easter and impact from a French air traffic controllers' strike in June were contributing factors to the fall.

It said revenue per passenger rose 1% due to "strong ancillary growth".

Ryanair added that unit costs rose 4%, mainly because of a 6% increase in fuel costs.

"As previously guided, higher fuel costs and the timing of Easter led to profits falling," chief executive Michael O'Leary said.

Ryanair boss Michael O'Leary

"As ever, our outlook remains cautious for the full year as market conditions are tough with recession, austerity, high fuel costs and excessive government taxes impacting air travel demands and yields."

Total revenue jumped 5% to 1.342bn euros (£1.15bn), up from 1.284bn euros (£1.1bn) in the same period last year,

He added: "While we expect full year traffic to grow 3% to 81.5 million, we still have no visibility over next winter's yields, and on the basis that the summer yield weakness in close-in summer bookings does not continue.

"We see no reason to change our full year profit after tax guidance which remains at between 570m euros to 600m euros (£504m)."

The airline saw "ancillary revenues" grow by 25% to 357m euros (£308m) - 27% of total revenues - driven by development of reserved seating, priority boarding, and higher administration and credit card fees.

Mr O'Leary added: "We are in ongoing negotiations with MAG, the new owners of Stansted airport to reverse six years of record traffic declines, but there is no guarantee that any deal will be agreed."

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Royal Baby: George Gives UK Business Boost

By Emma Birchley, Sky News Correspondent

The UK's newest Prince might be less than a week old but he is already proving to be a trendsetter as aspiring parents race to keep up with the Cambridges.

Sales of Britax Baby Safe seats have trebled at Kiddicare superstores since the newborn set off in one on his first car journey after leaving St Mary's Hospital on Tuesday.

And there has been a surge in orders of the £45 hand-finished merino wool shawl made by GH Hurt and Son in Nottingham that Prince George of Cambridge was wrapped in for his first photo shoot.

Alex Fisher, commercial director at Kiddicare, said: "I think it's fabulous news in terms of parents engaging with the fact there is a Royal baby.

"I think it will encourage people to renew and buy new products.

"Parents look at what is the latest product, who is the latest celebrity, and I think on the back of that the seat by default becomes aspirational."

There was so much interest in the dress worn by the Duchess of Cambridge that the designer's website crashed earlier in the week.

But it later emerged that the Jenny Packham design was a one-off and not for sale.

The royal seal of approval has been a blessing for some companies

The Centre for Retail Research predicts the new arrival will end up boosting the UK economy by close to £250 million.

That includes everything from the champagne sipped to help celebrate the baby's safe arrival to commemorative mugs.

And Richard Cope, director of trends at market researchers Mintel, believes spending inspired by the young Prince will be sustained by visitors to the UK.

"Tourist numbers are up by about 10% compared with a year ago. They're going to be here throughout the summer and they buy into the concept of the Royal Family.

"The tourist factor is going to drag out spending for months and months."

But it is not just retailers enjoying the Royal feelgood factor.

William and Kate's chosen charities are already benefiting, including East Anglia's Children's Hospices (EACH), of which the Duchess is patron.

Melanie Chew, fundraising director of EACH, said: "The donations are coming in from the UK, but overseas as well.

"We have had all kinds of generous offers from an ornate handmade cradle from Poland, we've had children's bedroom furniture from Slovenia and we have a charm bracelet on its way, so it's been terrific."

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Barclays Faces Fresh Customer Mis-Selling Bill

By Mark Kleinman, City Editor

Barclays will face up to mis-selling misdemeanours on three fronts next week when it sets aside hundreds of millions of pounds more for historical malpractice.

Sky News understands that the bank will make provisions for compensation for customers who were mis-sold payment protection insurance (PPI), interest rate derivatives and identity theft cover through the stricken credit card insurer CPP.

Insiders said this weekend that Barclays chief executive Antony Jenkins had been told by its regulators to be "conservative" in topping up its previous £2.6bn provision for PPI and an £850m bill for mis-selling swap products - designed to insure customers against sharp interest rate movements - to small businesses.

Barclays directors are also understood to have discussed taking its first hit for compensating CPP customers at a board meeting this week.

The final bill will be signed off by Mr Jenkins, Sir David Walker, the bank's chairman, and the soon-to-depart finance director Chris Lucas on Monday.

A Barclays spokesman declined to comment on the size of the new compensation figures but it is understood that they will take the amount it has set aside for swaps mis-selling to well over £1bn.

The scale of the new provisions will partly explain why Barclays is also planning to announce a major capital-raising comprising conventional shares and contingent convertible (or 'coco') bonds alongside its results.

That follows pressure from the Prudential Regulation Authority for Barclays to meet a target measuring the strength of its balance sheet, called the leverage ratio, by the end of next year.

The announcement will be made as part of Barclays' half-year results on Tuesday, and could undermine Mr Jenkins' efforts to overhaul the bank's reputation following last summer's Libor rate-rigging scandal.

Barclays was fined £290m for its role in the affair, leading to the departure of Mr Jenkins' predecessor, Bob Diamond.

It was also recently hit with a £300m penalty by a US energy regulator for attempting to manipulate electricity prices, although the bank is appealing against it.

Barclays will not be the only lender to add to its PPI mis-selling provisions during next week's results, with Lloyds Banking Group and others also expected to belie suggestions that the tidal wave of compensation claims had abated.

Barclays has, though, been particularly affected by the way interest is calculated on PPI compensation claims because of its liabilities dating back many years.

Mr Jenkins will also spell out the progress of his overhaul of the bank, called Transform, in which he will say that Barclays is exceeding cost-reduction targets announced in February.

Barclays declined to comment.

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£2bn Lloyds Profit Triggers Stake Sale Talks

By Mark Kleinman, City Editor

The agency which manages taxpayers' £19bn stake in Lloyds Banking Group is expected to hold talks with City investors this week about a quick-fire sale of shares as Britain's biggest high street lender unveils a £2bn half-year profit.

Sky News understands that UK Financial Investments (UKFI) and the Treasury will discuss in the coming days the prospect of an accelerated placing of shares in Lloyds with major institutional investors on or around the day that Lloyds announces half-year results on Thursday.

Treasury sources said that the results would show a "stellar" first-half performance from the bank, which owns the Halifax brand and is in the process of spinning TSB off into a separately-listed company.

Lloyds, they said, would report a statutory profit of approximately £2bn - in line with the consensus forecast of analysts - and also provide further positive news in the form of better-than-expected cost reductions and a stronger-than-anticipated capital position.

The move into the black would contrast with a loss of more than £400m at the half-year stage in 2012.

"The stars are aligned for us to start selling shares now," said one Whitehall insider.

The Government is understood to believe that it has a window of a few days beginning on the day of Lloyds' results to place a chunk of stock before the markets slow down too far for the summer to make such a substantial transaction more difficult.

Lord Davies is assembling a consortium keen to buy part of Lloyds

If the discussions do not point to sufficient demand for an institutional placing of shares, the Government would postpone any attempt to begin selling its 39% stake in the bank until September at the earliest.

A Treasury spokesman said that no timetable for the sale of shares had been set and refused to comment on the prospect of a sale next week.

Earlier this month, UKFI hired JP Morgan Cazenove, the investment bank, to advise on its privatisation strategy for Lloyds and Royal Bank of Scotland, in which taxpayers hold an 82% stake.

The agency also appointed a roster of other banks to execute deals in the capital markets to sell down the shares in the two banks during the coming years.

One banker said on Saturday that a report suggesting that Lloyds was priming City investors for a sale was inaccurate, arguing that the deal would be orchestrated by UKFI rather than the bank itself.

The source added that it would be theoretically possible to brief a group of investors the night before the results announcement - making them insiders unable to trade in Lloyds shares - with the objective of announcing a deal alongside on Thursday.

Sky News revealed earlier this month that Lord Davies, the former trade minister, was assembling a consortium of investors keen to buy at least half of the Government's stake in Lloyds.

The half-year results are expected to include a modest new provision for payment protection insurance mis-selling, taking Lloyds' total bill so far to more than £7bn, one insider said.

However, unlike Barclays, the bank is not expected to have to set aside money to compensate small businesses for mis-selling interest rate swaps or customers of CPP, the identity theft insurer.

On Friday, Lloyds shares closed at 68.37p, which if sustained until after next week's results announcement would make a placing at or above 61p viable, banking sources said. Such a deal would be likely to take place at a discount to the prevailing share price.

The 61p figure is significant because Lloyds said in March that it had been notified by the Treasury that that was the average price at which taxpayers' support for Lloyds during the banking crisis had been recorded in the public finances.

Selling above that price would be significant for George Osborne, the Chancellor, because it would allow him to hail the return of funds injected by taxpayers into Lloyds after its initially disastrous merger with HBOS.

It would also be potentially meaningful for Antonio Horta-Osorio, Lloyds' chief executive, whose £1.48m deferred share bonus awarded in March will only vest under certain conditions, one of which is that at least one-third of the Government's shareholding is sold for at least 61p-per-share.

Lloyds declined to comment on Saturday.

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Halliburton To Plead Guilty Over Gulf Oil Spill

Halliburton is to plead guilty to destroying evidence in connection with the 2010 Gulf of Mexico oil spill.

The US company has agreed to pay the maximum statutory fine of $200,000 (£130,000), to stay on probation for three years and to continue to cooperate with the government's criminal investigation.

Halliburton, which is the world's second-largest oilfield services company, has also made a $55m (£35.7m) voluntary contribution to the National Fish and Wildlife Foundation.

Halliburton was BP's cement contractor on the drilling rig whose blowout triggered an explosion that killed 11 workers and spilled millions of gallons of oil into the Gulf of Mexico.

A Justice Department statement said Halliburton - which constructed the cement casing of the well at the centre of the disaster - had carried out its own internal investigations following the disaster in April 2010.

But results of computer simulations carried out in May and June 2010 were ordered to be destroyed and were unable to be recovered, the Justice Department said.

The company said in a statement that it had agreed to plead guilty "to one misdemeanour violation associated with the deletion of records created after the Macondo well incident".

The Justice Department has agreed it will not pursue further criminal prosecution of the company or its subsidiaries for any conduct arising from the 2010 spill, Halliburton's statement said.

The plea agreement is subject to court approval, the company said.

According to the government, Halliburton recommended to BP that the Macondo well contain 21 centralisers, metal collars that can improve cementing, but BP chose to use six.

The government said that, during an internal probe into the cementing after the blowout, Halliburton ordered workers to destroy computer simulations that showed little difference between using six and 21 centralisers.

Efforts to locate the simulations forensically were unsuccessful.

Halliburton and BP have blamed each other for the failure of the cement job to seal the Macondo well.

The Gulf of Mexico oil spill was the largest offshore oil disaster in US history, wreaking havoc on the region's environment and economy.

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